Which ratio do auditors find useful for assessing misstatements in sales, cost of goods sold, accounts receivable, and inventory?
A) earnings per share
B) profit margin
C) gross profit percent
D) current ratio

Question

Quizplus · Accepted Answer

The ratio that auditors find useful for assessing misstatements in sales, cost of goods sold, accounts receivable, and inventory is the gross profit percentage. This ratio compares the gross profit earned from sales to the sales revenue, which helps in identifying any misstatements in sales or cost of goods sold. Additionally, it also helps in identifying misstatements in accounts receivable and inventory by comparing the gross profit percentage over a period of time. Therefore, option C- gross profit percent is the best choice.

Which Ratio Do Auditors Find Useful for Assessing Misstatements in Sales